Tuesday, June 13, 2006

Current Seas (circa 2003)

It is strongly recommended that people in the US should get out and see as well as experience other parts of the world outside of the America’s. This is a practice that I like to keep in effect. In doing such I have noticed over the past year the dramatic slip in the purchasing power of the US Dollar. This can be no more visible than when one makes regular currency exchanges. On my most recent trip to South Africa and Malawi, I received 6.5 rand to the dollar. It was somewhat upsetting since three months and 6 months prior I got 8.5 and 10.1 to the dollar respectively.

We you have to the chance to travel, you regular get a first had observation of how strong the dollar is as a s sheet of paper currency. What you can purchase abroad with it compared to at home in the States is mid boggling at times. This is in particular to countries in Africa and Asia.

I speculate the recent declines are associated with the deficit and the looming anticipation of trade wars brewing between the US with China, Britain and the European Union. The most recent exchange rates have $1.20 Euros to the dollar. This type of strong reduction in value will prove problematic not only for US citizens but also financial markets around the globe. Since every thing, including all commodities and world markets are valued and based on the dollar, decreases in its value will likely make every one try to devalue their currency so they will not have to, as a country or nation pay more for goods. Over the past 18 months the dollar has dropped 27 and 19 percent respectively to the Euro and the Japanese Yen.

The large and growing deficit being increased over the tenure of the current administration is one contributing reason for the dollars decline. This sea change of a sorts is related to a few things. The deficit is growing more daily while at the same time the US economy still sees Americans buying more stuff from abroad than they are selling abroad. Couple this with a loss of about 3 million jobs over the same period, the wars in Iraq and Afghanistan, this just may be the start of something troubling.

Although we see the stock market rising, when the dollar falls in value, we will likely see a decline in the purchasing of US Equities and Bonds by foreign investors. No one wants to by Bonds if the currency underneath the bond is weak.. Gold is at a seven year high and that thing we call the deficit is expected to grow to $500 billion or more. Like I said, travel more America, get out the country. WE can’t buy much in our country anymore with the dollar, so we may as well spend it abroad, where we get more bang for out buck.


P said...

My friend is going to China next month; I am interested in her experience while she is there.

But I DID tell her to pick me up a LOUIE bag while she was there.


I am planning possibly a trip to Italy at the end of next year. :P

Ri said...

You should try here in Cayman CI$1 = US$1.20.

Rose said...

That's a great education on currency. Unfortunately I don't see myself traveling out of the country any time soon as I can't stand sitting on a flight that long.

Miz JJ said...

The slidding US dollar is great for me since I am Canadian. I went to Vegas and shopping was so cheap!

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obifromsouthlondon said...

you advice is being taken. had a fellow blogger come over from your end for two weeks. never been abroad b4 and it was an eye opener for her.

MsJayy said...

Yes, we should travel (both inside & outside the US). Had friends just come back from Greece & others heading to China in October so I'm really interested in their thoughts.

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